Mumbai, Jan 19: The rupee weakened further by 5 paise to close at one-week low level of 68.13 against the resurgent dollar amid a hawkish tone from the US Federal Reserve. High volatility continued to churn the market for the second day as investors waited for more clarity in an uncertain global scenario in the midst of confusing signals from major world central banks. Consistent demand for the US currency from importers mainly weighed on the rupee. However, better capital inflows alongside firm local equities helped the home currency to regain some lost ground towards the fag-end trade, a forex dealer said.
The rupee opened substantially lower at 68.20 from last close of 68.08 at the Interbank Foreign Exchange (Forex) market and continued to witness immense pressure due to steady dollar demand. After hitting an intra-day low of 68.27, the local unit managed to recoup some early loses before ending lower by 5 paise at 68.13, which is the lowest since January 13 when the home currency had closed at 68.16 per dollar. The rupee depreciated by 13 paise yesterday. The US dollar staged resounding rally against most of its major peers on the back of hawkish comments from Janet Yellen that the US economy is approaching the full employment and price targets, which stipulates that the Fed would raise rates as planned. The US dollar index was trading at 101.08 in late afternoon session.
Meanwhile, the ECB will have a monetary policy meeting later in the day. The RBI fixed the reference rate for the dollar at 68.1766 and for the euro at 72.5194.
In cross-currency trade, the rupee also drifted further against the British pound to settle at 83.93 against overnight close of 83.71 per pound yesterday. But, it rebounded against the euro to finish at 72.59 as compared to 72.74 and strengthened against the Japanese Yen to conclude at 59.41 per 100 yens from 60.00 earlier. Meanwhile, equities gained further ground in a lacklustre trading session following continued buying support in key frontline heavyweights.
The Sensex rose 50.96 points to close at 27,308.60, while broader Nifty firmed up 18.10 pts to 8,435.10. FPIs today sold shares worth Rs 132 crore on net basis. In the forward market, premium for dollar moved down due to fresh receivings from exporters. The benchmark six-month premium for June edged down to 138.75-140.75 paise from 141-143 paise and the far-forward December 2017 contract also slipped to 280-282 paise from 282-284 paise. Crude oil prices rebounded from a one-week low after the International Energy Agency (IEA) said global oil markets were tightening even before cuts promised by OPEC and other producers could take shape.
Source: india.com